Home Buyers Forced to Change Tactics (Washington Post)

The credit crunch has turned $417,000 into the magic number for home buyers shopping for mortgages.

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[Source: Yahoo! News Search Results for mortgages]

MortgageIT Discontinues Subprime Lending

In a letter to brokers dated yesterday MortgageIT, a subsidiary of Deutsche Bank, announced it is no longer originating or funding subprime loans. No word on the fate of loans currently in process; as the letter only suggests the ever-nebulous “call for more info.” If anyone hears about loans in process please let us know in the comments. Here is a copy of the letter sent out:

To Our Valued Business Partners:

This is to inform you that, in light of the current conditions in the secondary mortgage market, effective immediately, we are discontinuing our subprime mortgage product offerings.

If we are currently processing a subprime mortgage loan for you, please contact your Account Executive for additional information.

We continue to carefully monitor the markets and will reevaluate our product offerings in accordance with any meaningful market shifts.

You are a valued business partner and we look forward to continuing to work with you now and into the future.

Sincerely,

R.J. Arnett
Managing Director
Wholesale Lending Division

Makes sense to me - with German banks taking the brunt of the subprime meltdown in the Euro-arena I can’t imagine any large European bank effectively justifying their continued presence in the subprime market to their investors.

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[Source: Blown Mortgage]

Impac exits wholesale lending

Reports indicate that Impac has decided to exit the wholesale lending arena. They are keeping a small internal retail operation; but have ceased doing business via the broker channel. This report is courtesy of the ml-implode.com premium email service; which I highly recommend subscribing to if you are interested in the latest news in the mortgage industry.

There is no notification on the Impac broker site regarding this announcement. However; several emails were forwarded to ml-implode.com noting the change in business models.

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[Source: Blown Mortgage]

Countrywide goes on the B2B offensive

A letter sent to wholesale partners of Countrywide was released tonight in an obvious attempt to calm any jitters amongst wholesale brokers partnered with the massive mortgage lender. Probably a good move on Countrywide’s part; you know brokers are freaking out watching their lending options evaporate in to thin air on a daily basis. I have heard rumors that Bank of America and the other large institutions still standing are currently inundated with broker inquiries for approval. Heck chalk my company up as one over at BofA. Hey the loans have to go somewhere, right?

Here is the letter below:

This is unquestionably one of the most challenging times in the annals of mortgage lending. As such, this communication is the first of a series that will outline how Countrywide, America’s Wholesale Lender is navigating through this challenging market. Additionally, it is my desire that these ongoing communications will share some perspective that will help you to adapt and prosper in the current mortgage lending environment.

Countrywide in the News

First, I would like to take a moment to address some recent developments that have strengthened our ability to serve both you and your borrowers.

• Bank of America Investment in Countrywide On August 22, Bank of America invested $2 billion in Countrywide in the form of non-voting, convertible preferred securities. It is important to note that this is an investment in, and not an acquisition of Countrywide. Bank of America does not have representation on Countrywide’s board or a management role in the company.
• 
  The investment is a true vote of confidence in Countrywide from the largest retail banking franchise in the nation. It strengthens our balance sheet and benefits all of Countrywide’s constituents including our Business Partners.

• Additional Funding Liquidity We have recently drawn upon credit facilities provided by a syndicate of 40 of the world’s largest banks, which provided an infusion of $11.5 billion to supplement Countrywide’s liquidity.
• 
  
• Mortgage Business Migration We recently announced that we have accelerated our long-held plans to migrate our mortgage business into Countrywide Bank which has over $100 billion in assets. We are executing this migration as quickly as possible and do not expect it to materially change the way we operate, our key strategies, or our continuing goal to be the dominant lender in the wholesale channel.

Now that I’ve outlined the steps taken to strengthen Countrywide’s franchise, let’s turn our attention to the current market environment.

Secondary Market Driving Change

Further complicating an already tough real estate and lending environment is one of the weakest secondary markets in history. The result is that there is limited demand for mortgages or mortgage-backed bonds other than what is commonly referred to as the “agency” execution (Fannie Mae and Freddie Mac). Despite this disruption in the secondary market, substantial lenders like Countrywide, with access to a bank balance sheet, are well positioned to succeed.

In an effort to address the above challenges, Countrywide, along with the rest of the industry, has been revising product guidelines and pricing policy on an ongoing basis. It is likely that these areas will continue to change so I urge you to check cwbc.com frequently to ensure that you have our most updated guideline and pricing information.

Channel Dynamics

Another challenge facing the wholesale lending channel is that the mortgage industry has shifted toward a retail bias. Why? There are many factors. However, one of the major causes is that loans originated and processed on a retail basis generally perform better than third party originations where an intermediary originates and processes the loan on behalf of the lender.

While this bias may seem daunting to your business, it is a challenge that can be overcome with a simple formula everyone involved in the wholesale lending channel must work to improve the performance of third party originated loans. By consistently elevating borrower and loan quality, we can, over time, bring the market back to parity. Your best source for ensuring loan quality is to work closely with your Account Representative and branch or fulfillment center to assist in properly documenting all loan submissions consistent with lending guidelines and loan approval conditions.

In addition, it is imperative that you adopt (or continue) the proven “best practice” of presenting your borrowers with a full array of product and pricing options. Your focus should be on allowing them to make truly informed decisions that best meet their financing needs and ability to re-pay. This practice will not only ensure a long term relationship with your customer but is part and parcel of ensuring high quality loans and good performance.

Our Ongoing Commitment to the Channel

As stated in the opening of this communication, all of us who earn our living in the wholesale lending arena are facing challenging times; times that require us to work together to achieve a common goal successfully evolving the wholesale lending channel.
Our focus at Countrywide remains constant working with and supporting only those brokers who can adapt and evolve their business model and who can originate quality loans consistent with our strengthened lending standards. None of us should ever contemplate doing a loan we wouldn’t be willing to fund with our own money.

When navigating the current waters, keep in mind that, for over 23 years, Countrywide, America’s Wholesale Lender has been fervently committed to the wholesale channel and to the success of our Business Partners. We maintain a strong leadership position and focus on achieving a dominant status among wholesale lenders.

Thank you for your time and attention to these important matters.

Todd A. Dal Porto
Senior Managing Director & President
Countrywide, America’s Wholesale Lender

And there you have it.

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[Source: Blown Mortgage]

Peter Viles on CNN talks CA Housing Bubble

Friend of Blown Mortgage, the L.A. Times Peter Viles was on CNN recently discussing the current housing situation in Los Angeles and California in general. A good 3-minute segment in which Peter sums up the state of housing affairs in California nicely.

For more Peter be sure to read his excellent L.A. Land blog and check out the podcast interview Peter was gracious enough to do with Blown Mortgage earlier this year.

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[Source: Blown Mortgage]

Sources: Wells Fargo to Eliminate 100% Financing

Wells Fargo will announce the elimination of 100% financing for all credit grades, loan sizes and document types shortly. This move acknowledges the recent downturn in the housing market and the lack of investor confidence in the US housing market. Clearly, very few people with money to buy MBS on Wall Street are betting that home values have stabilized or will show any signs of positive equity gain in the near-term future.

I am not sure if this change is going to be nationwide or California only, but I suspect it will be a nationwide change to guidelines.

Wells Fargo will continue to do 100% financing in one situation only: they will lend an 80% first with a 20% seller carry-back second for fully documented borrowers only. Other than that 100% financing is imminently is danger of extinction at Wells Fargo.

It is clearly the right move, as regardless of credit scores, properties continue to decline in most areas of the country.

This information was passed to me by a Wells Fargo representative, I’ll update when the official announcement and guideline changes appear. If anyone can corroborate it I would appreciate it.

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[Source: Blown Mortgage]

N.Z. company comes to Canada to tackle market for reverse mortgages (Canadian Business)

TORONTO (CP) - New Zealand-based Senior's Money International has announced it is setting up shop in Canada to offer "reverse mortgages" in competition against the Canadian Home Income Plan reverse mortgages offered by Home Equity Income Trust (TSX: HEQ.UN).

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[Source: Yahoo! News Search Results for mortgages]